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I chose (TKC) Turkcell over (VOD) Vodafone and (VZ) Verizon in stormy weather because I go for solid shelter of high dividends yields and growth at a cheap price July 25, 2006

Posted by deminvest in investment.
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It may seem an hardly understandable Turkish move to buy (TKC) Turkcell, when a proletarian investor could buy his cell phone company Vodafone (in Europe) or Verizon (in USA), but TKC has something that we miss in the West: market growth opportunities.

Turkcell is market leader in Turkey with 30 Million customers and has interests in international GSM operations in Azerbaijan, Georgia, Kazakhstan, Moldova, Northern Cyprus and Ukraine.

 

TKC has as similarly low P/E ratio as Verizon and Vodafone, but it enjoys strong growth for the simple reason that there are still lots of people in Eastern Europe who do not have cell phones yet.

In Westerns countries everybody has already a cell phone, so there is hardly growth possible, unless some new useful (and expensive) service is invented. I don’t want to talk holding up my mobile to let someone see how I am dressed and where I am. I am not at all willing to pay for that. Paying to watch a baseball game in a mobile phone to see where the ball as big as a pixel will go seems to me pointless.

 

TKC is cheap:

Trailing P/E:9.37

Forward P/E:8.48

 

TKC is growing fast:

Quarterly Revenue Growth (yoy):26.10%

Quarterly Earnings Growth (yoy):45.80%

 

TKC has hardly any debt.

 

TKC has lovely dividends:

Trailing Annual Dividend Yield: 3.10%

Forward Annual Dividend Yield: 4.10%…. With a Payout Ratio of 20% that means only 20% of its earnings are used to pay those juicy dividends.

VOD is not growing anymore; it is posting losses instead of earnings and has some debts.
VZ is posting Quarterly Earnings Growth (yoy):-7.10% and is more expensive with P/E ratios around 12%.

So I have to choose Turkey over the West, no matter how amazed I am by my choice.

 

Comments»

1. len - July 26, 2006

TKC seem to be a good choice and ur right it’s got some market in not so popular market base. what’s the reason for popularity in turkey? efficient service?

2. deminvest - July 26, 2006

Each country has a main cell operator, probably based on first mover. The first mover tipically estabilishes phisycal access points and rents them to newcomers trough roaming agreements. TKC is leader in a fast growing market and has no debt.

3. len - July 27, 2006

thanks vado for those enlightening inputs.

4. deminvest - July 27, 2006

Cool! TKC went up 7% today 🙂

5. len - July 28, 2006

that’s great showing vado..may the force be with u and tanti auguri!


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